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Budget 2019-2020: Concerns

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July 06, 2019

What is the issue?

The Budget released yesterday has many concerns like the way it is carrying a new thinking of digital economy, but still ended up fragmented and minimalist.

What is digital economy’s situation?

  • The government’s digital idea in the budget does not unpack the idea of data as a public good in the spirit of the Constitution of India.
  • Economic Survey – Aims to open up all data for all sectors in all departments to the private sector.
  • Budget – Sidestepped the idea of digital and data infrastructure as the government’s framework has no substantial reference to its public investments in it.

What is the digital game plan?

  • The digital game plan for the economy and its 3 trillion-dollar mark for the upcoming year seems to be a sloppy attempt.
  • A lop-sided balance between perfunctory good words about MSMEs and start ups and strident hard talk underscoring an expanded role for privatisation and foreign investment.

Where the focus lacks?

  • Saying Connectivity as the life blood of the country, the Finance Minister invoked many schemes —Gram Sadak Yojana, Bharatmala Pariyojana, etc.
  • But no mention about the internet infrastructure.
  • Nearly 50% of rural India still does not have access to the Internet.
  • Investment modalities for digitisation in strategic sectors must be aware of key concerns like data sovereignty, citizen oversight, corporate accountability, national security and domestic capital accumulation.
  • But private investment mustn’t undermine economic and social goals.

Which is a welcoming step with a caution?

  • The online portal for MSME credit is a welcome step.
  • But the scheme could upset the credit market severely as it has generated ₹11,000 crore NPAs comes as a caution.
  • Several borrowers or enterprises under the MUDRA loan scheme are not traceable and the share of manufacturing is a small fraction.

How to make ‘Make in India’ a success for digital start-ups?

  • Make in India can succeed for digital start-ups only when a strong vendor base is set up in the MSME space.
  • The assurance to start-ups that concerns on the angel tax will be resolved does suggest a desire within the government to promote domestic innovation and is good news for digital start-ups in India.
  • It is however not completely clear if digital innovation has received the boost it needs.

How the duties are affecting the digital sector?

  • Cutting edge innovation tends to be capital intensive, as it requires high-tech hardware devices that needs to be imported.
  • The high import duty on IoT devices and this makes it a serious concern for the industries manufacturing drones which rely on costly imports of essential components.
  • The Budget speech did refer to exemptions on customs duties for manufacture of electronic goods but more information on the fine print is necessary to confirm any optimistic outlook.

Where do the labour codes lag?

  • To know about the proposed labour codes, click here.
  • They are far from creating a uniform minimum wage.
  • They do not guarantee specific rights, such as consumption or productivity-based criteria for setting the minimum wage, instead choosing skill-based criteria.
  • In the context of deskilling in the digital economy, this is particularly worrisome.

Why revitalizing agriculture is not easy?

  • The critical digital infrastructural gaps render e-NAM an uneasy solution at best.
  • Inter-state commodity trading is not easy in India and ‘One country, one market’ idea seems more a pipe dream.
  • To gain traction, public investments are vital as they integrate other solutions like warehousing, logistics and credit — with the portal.
  • The omission of agriculture research outlays in frontier areas such as AI and in the requisite training and skilling to produce a new generation of Agro-extension workers also reflects a blind spot.

Why digital literacy is important?

  • Some facts need to be put in perspective, like
    1. Praising that 2 crore rural Indians are trained to be digitally literate.
    2. Announcement of plans to train 10 million youth for meeting the complex challenges of the 21st century.
  • Good approach – Should focus on strengthening public education so that children and young people emerge as competent and critical users and creators of technology.
  • Costly yet a negative approach – The under investment in primary and secondary public education and undue focus on a handful of higher educational institutions so as to draw foreign students.

What are the issues for PPP and other issues?

  • Public-private partnership (PPP) arrangements – In Bharat Net and internet connectivity for local bodies in every Panchayat.
  • The proposed approach may not be the best fit for rural e-governance.
  • Studies say – The private entrepreneurship model in the Common Services Scheme has failed.
  • Stand Up India’ – Enormously benefitted the women, and SC and ST populations, through the loans availed for purchase of scavenging machines and robots.
  • Access to dignity must be provided as a right – so robots can replace human beings in all situations of dehumanising work.
  • Social stock exchange – The electronic fundraising platform for the social sector devised in the name of inclusive growth, requires wider deliberation.
  • It is unclear why the social sector needs a financialised, stock exchange model, and who this will benefit remains a matter of concern.
  • An efficient agricultural or health care system that works for the majority is highly unlikely to come only from private sector innovations subsidised by public data sets.
  • Policy vision with an appropriate budgetary architecture – Crucial for how Digital India in the AI age will be operationalised, but the silence on its count is a disappointment.


Source: Business Line

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